The Atlantic Canada Opportunities Agency is part of the fabric of eastern Canada.
Established in 1987 to share more of the nation’s wealth with the region, ACOA enjoys unusually strong awareness and widespread appreciation in Nova Scotia, New Brunswick, Newfoundland & Labrador and Prince Edward Island. “Few Atlantic Canadians have not heard of ACOA or have not been touched directly or indirectly by the work done by the Agency,” said a 1994 Parliamentary report published just seven years after its creation.
The agency’s footprint is big: ACOA has more employees and offices than any of its six fellow regional-development agencies, including those serving Quebec and the densely populated Ontario corridor between Ottawa and Windsor, and spends more on administration than either. Quebec and southern Ontario each have more than triple the combined population of the Atlantic provinces.
“ACOA creates and promotes opportunities for economic growth in the region by helping businesses become more competitive, innovative and productive,” ACOA says on its website. “It works with communities to develop their economies, helping them create jobs and a better quality of life for all Atlantic Canadians, including women, Indigenous peoples, racialized Canadians, persons with disabilities and the LGBTQ2+ community. It champions the strengths of Atlantic Canada.”
ACOA achieves its goal by making loans, generally interest-free, to businesses, as well as grants to non-profit groups and municipalities. Many of the grant monies extended by ACOA could qualify as good works, even if the projects might not well fit the definition of “regional development.” In 2022, recipients included numerous independent theatres; the Ronald McDonald House in St. John’s; a community centre in North Preston, which has
Nova Scotia’s largest population of African Canadians; and a 26-acre outdoor refuge in Prince Edward Island for families who have lost a child.
Another organization that ACOA supports is the charitable enterprise operating Newfoundland’s famous Fogo Island Inn, which charges thousands of dollars for a night’s accommodation and has been ranked among the finest hotels in the world.
Central Newfoundland Hospice
Last year, a charity in Grand Falls-Windsor, in central Newfoundland, received a $100,000 (US$75,640) grant from ACOA to help create the Lionel Kelland Hospice, a 10-bed end-of-life facility. About half of the project’s $7.6 million cost is being underwritten by the province and the rest through private pledges, said Rose M. Daley, who led fundraising for what will be Newfoundland’s first hospice when it opens.
“Like most Canadians, people in Newfoundland & Labrador want to spend their last days at home,” Daley said via email. “For varied reasons, many are unable to spend those days and weeks in their own residences. Some do not have anyone who is able to provide the level of care they need. Very often, symptoms and pain cannot be managed effectively at home. These realities emphasize the need for a residential palliative care hospice here in our province.”
In Nova Scotia, a $112,399 grant from ACOA is helping a community heal from the April 2020 mass shooting whose 22 victims included Lisa McCully, a teacher at Debert Elementary School. The funding helped pay for a new school playground dedicated to McCully’s memory. “Our school was very grateful for the grant we received from ACOA towards our project,” Alisha Johnson, co-chair of the local parent and teacher association, said in an email. Johnson said the playground is on track for a grand opening in September.
Research Findings
An HBB analysis of loans and grants awarded during the 2022 calendar year shows that about 20% of ACOA’s grants went to fund municipal public works and projects that HBB considered “community-builders.” Another 40% or so went to entities that HBB categorized as for-profit entities, and 15% went to trade associations and non-profit organizations. Most of the rest of the funding was supplied to tourism and educational endeavours, Indigenous groups and farms affected by potato fungus. The analysis, based on expenditures available on the federal government’s public disclosure website, involved an examination of almost 900 ACOA grants and loans of at least $100,000. The ACOA portal lists 2,104 items for 2022 if all expenditures are included, some of which are double-counted because the amounts were later changed.
A large part of ACOA’s mandate - to expand local economies and increase regional incomes - is reflected in loans to companies, a good number of which are long-established with millions of dollars of sales or connections to others with billions, and which presumably have access to adequate bank credit and even securities markets. In 2022, ACOA loaned several hundred thousand dollars to a fast-growing indoor-farming business in which New Brunswick's McCain Foods has a significant interest.
Newfoundland and PEI
The provinces of Newfoundland & Labrador and PEI punched above their weight in securing loans and grants given the size of their populations, the analysis found. Newfoundland & Labrador, with 21% of Atlantic Canada’s population, received 26% of the total “contributions,” as ACOA refers to its grants and loans. PEI, which accounts for 6.9% of the regional population, received about 14% of the contributions awarded, and Nova Scotia, with 41% of the region’s population, received about 34%. New Brunswick, with 31% of the population, received about 25% of the contributions.
In addition to direct grants made to individual recipients, ACOA works through non-profit companies to deliver services in Atlantic Canada. Learnsphere Canada Inc. of Fredericton is an example.
Annette Comeau had been a senior program manager at ACOA for four years when she was recruited in 1995 to become chief executive of Learnsphere, which designs and delivers online courses and in-person workshops for small-businesses and individuals seeking to improve their workplace skills. Since, 2006, Learnsphere has received $34.6 million from ACOA, or about 52.6% of its funding, with the rest coming from provincial and private sources and other federal departments. The company serves 3,000 organizations and has trained 60,000 people.
In 2022, Learnsphere received $654,145 to provide “export assistance” to companies in PEI and New Brunswick.
“Governments at various levels rely heavily on non-profit organizations such as ours to deliver publicly financed programs and services,” Comeau said via email. “Non-profits across Canada are important partners in economic, health and other social sectors to expand or assist in delivering and implementing initiatives that are deemed important to government mandates and the public. This was never more apparent than during the pandemic when businesses needed help. We continue to see it today as we navigate business challenges due to skills and labour shortages.”
Pandemic Funding
The pandemic was raging and many Canadians suffering in early 2020 when governments on all levels opened the money spigots. The federal government spent billions of extra dollars on health care and ramped up program spending. ACOA answered the call, boosting outlays by 68% to $545 million in the 2020-2021 fiscal year, much of the increase coming in the form of Covid-19 relief. ACOA spending fell in fiscal 2021-2022 and is slated to fall further in the current fiscal year as the pandemic recedes.
Among ACOA’s Covid-19 recipients was Shorefast Social Enterprises Inc., which operates the 29-room Fogo Island Inn off Newfoundland about 400 kilometers north of St. John’s.
Spectacularly situated on an outcrop at the easternmost edge of North America, the hotel was a brainchild of Zita Cobb, a Fogo Island native who made a fortune during the 1990s technology boom. The inn, which employed 255 Fogo Islanders before the pandemic, has been ranked among the 50 best hotels in the world by Conde Nast Traveler. Shorefast and Cobb have won praise for restoring artifacts and buildings from the island’s centuries-old fishing culture and bolstering the economic well-being of islanders. According to Shorefast's "Economic Nutrition" analysis, 49% of the room cost covers labour and 65% of the economic benefits of a night spent at the inn remain on the island.
Covid Assistance
In January 2021, Shorefast Social Enterprises received an ACOA loan of almost $2 million “to provide assistance to mitigate impacts of Covid-19." Over the past 15 years, the company and its charitable foundation have received ACOA grants and loans totaling $10.7 million, including a $6.5 million grant in 2008 to "construct tourist infrastructure.” The 2021 loan to Shorefast Social Enterprises was among the 35 largest of 1,400 contributions extended by ACOA that year.
“It is important to note that these were time-limited measures established by the Government of Canada to help businesses get through the pandemic,” an ACOA spokesperson said. The Fogo Island Inn’s vice president of marketing and social business development declined to comment.
In 2022, Shorefast Social Enterprises received three grants totaling $550,000 “to undertake operational improvements through the adoption of digital technologies”; to “enhance the product offering of an existing accommodations property”; and “to undertake a 12 month community economics pilot” studying how other Canadian communities can replicate what Shorefast has done on Fogo Island. In Shorefast Foundation's December 2022 tax filing, the charity valued its land and buildings at $50.1 million and said it spent $3.2 million on charitable activities during the year.
Pickleball Courts
Some smaller beneficiaries said ACOA’s detailed application requirements are demanding but well worth the time.
“Although the process is not quick or without significant effort, it is worth every minute invested,” Louise Boldon, whose New Brunswick pickleball club received an ACOA grant, said in an email. “The whole experience from start to present has been well supported by ACOA staff members who are very helpful, forthcoming and friendly.”
Boldon, who oversaw fundraising for six outdoor pickleball courts being built in Fredericton, said she “stumbled upon the ACOA grant by mistake” while searching for external funding sources. The club received a $127,930 grant to help pay for the courts. Boldon said the “lion’s share” of the funding came from the federal government and the province. Construction of the courts, at the Willie O’Ree athletics complex, has begun and is scheduled to finish by September 1, weather permitting, Boldon said.
A search under "pickleball" on the federal disclosure portal reveals 67 pickleball-related contributions nationwide, mirroring the sport’s exploding popularity in Canada since the pandemic.
Staffing and Offices
ACOA’s mission in the 2021-2022 fiscal year was achieved with the equivalent of 595 full-time employees spread across
30 offices. In that period, ACOA spent $29.2 million on
operations, compared with $24.8 million by Canada Economic Development for Quebec Regions, which had 393 employees in 11 offices; and $13.9 million by the Federal Economic Development Agency for Southern Ontario, which had 348 employees in four offices. In fiscal 2021-2022, ACOA dispensed $414 million, compared with $419 million for the Quebec agency and $386 million for the one in Ontario. In its first fiscal year 36 years ago, ACOA allocated $78 million for projects.
ACOA contributions are classified as “non-repayable,” “unconditionally repayable” or “conditionally repayable.” Non-repayable contributions are grants that go mainly to non-profit organizations and municipalities, while most companies receive funding in the form of unconditionally repayable or conditionally repayable contributions. In the latter case, recipients do not have to repay the loans if they fail to meet certain conditions. ACOA contributions are often a small piece of the funding puzzle for a given project, supplemented by provincial and private funding.
In one case, companies owned by New Brunswick’s billionaire Irving family did not, according to a CBC report, have to fully repay loans worth millions of dollars because the project did not meet targets stipulated in ACOA loan agreements.
Unconditionally Repayable?
Even unconditionally repayable contributions may turn out to be unrepayable. Rambler Metals & Mining, a British company with copper mines in Newfoundland & Labrador, was declared insolvent in April, meaning it was no longer able to pay its debts. Since 2016, Rambler has received $3 million in unconditionally repayable loans, including $1 million of Covid assistance in 2021. In 2022, Rambler Metals received a further $100,000, in the form of a grant, for "digital improvements."
“There is no evidence to suggest that ACOA has made any meaningful, long-term, sustainable impact on economic growth or job creation in Atlantic Canada,” said Alex Whalen, the head researcher in the Halifax office of the Fraser Institute, a right-leaning think tank that is a long-time critic of federal and provincial spending. “In fact, the reverse is likely true given interference with the market and the contribution to the region’s size-of-government problem and politicization of market processes.”
ACOA officials said any information regarding the status of the Rambler loans would be available only under an Access to Information request.
Data suggests that upwards of 20% of the dollar amount of ACOA loans are never recouped, and the figure may be higher. A 2007 study from the Fraser Institute found that 63.5% of ACOA loans were outstanding from the 10-year period ended in 2006. ACOA’s own research from 2014 showed that 22% of the dollar amount of interest-free loans made between 1995 and 2014 under the agency’s business-development program was defaulted on, written off or forgiven, while 53% was repaid and 25% remained outstanding. ACOA said the chart is no longer made available to the public and that such information can be obtained only through an Access to Information request.
As a comparison, 3.3% of the Business Development Bank of Canada's loan portfolio consisted of bad loans in 2019 and default rates on bank loans were even lower, according to the National Post. The BDC is a crown corporation that makes loans to businesses.
Benefits and Costs
“There’s no doubt that there are some benefits generated from the hundreds of millions of dollars spent on the program,” Whalen said. “The question is whether the money being spent generates more benefits than costs, and I think the answer is pretty clearly “no.”
Some companies that obtain ACOA loans are unlikely to default. McCain Foods, with $11 billion in annual sales, is invested in an indoor-farming company that last year received an ACOA loan of almost $400,000 to “expand and upgrade existing R&D facilities to support continued growth.”
The recipient, Guelph, Ontario-based Goodleaf Farms, doesn’t appear to need assistance from ACOA. In 2018, Goodleaf received $4.4 million from the federal government’s agriculture agency and last year raised $150 million in equity capital from McCain and a private-equity firm run by a former McCain executive. In May, Goodleaf announced a further equity investment, this one from a crown corporation, and a $78 million syndicated loan from Canadian Imperial Bank of Commerce and Farm Credit Canada, a federal agency whose loans traditionally go to rural farmers.
A spokesperson for McCain declined to comment on Goodleaf.
Goodleaf Farms, whose CEO is also a former McCain executive, operates a research and development centre near Truro, Nova Scotia. Goodleaf Farms appears as "Goodleaf Community Farms" in the federal search portal.
The Biggest Contribution
The largest ACOA contribution in 2022, an $8 million loan, went to Real Dairy Co., of Newfoundland, which is owned by 13 provincial dairy farmers and Glenstal Foods, an Irish cheese and butter maker that has a 20% stake in Real Dairy. The loan is part of a plan under which the Canadian federal and provincial governments are financing as much as 75% of a $25.1 million milk-processing plant in Deer Lake. The plant will employ 10 people full-time earning between $52,000 and $65,000, according to a June 2022 environmental assessment filed with the province. Other work, including bookkeeping and snow removal, will be done by contractors.
“The Canadian agriculture and agri-food sector is a powerhouse of the economy, spurring job creation and prosperity across the country,” ACOA said in a 2021 press release announcing the funding. “That is why the Government of Canada is helping The Real Dairy Company of Newfoundland Ltd. provide stability to the dairy industry and enhance food self-sufficiency in Newfoundland and Labrador.”
Sharing Equitably
The 1994 Parliamentary report specifies a “regional development policy which concentrates on measures to accelerate growth in the region as a means of ensuring an equitable distribution of income and employment. The objective of balanced regional development has been part of national policy since Confederation. Regional policy seeks to ensure that Canada’s prosperity is shared equitably among all members of society.”
In a few cases, it’s unclear whether ACOA money is having much of a local economic impact and whether it’s meeting the goal of “equitable” distribution.
HBB identified two loan recipients for which no physical location could be found in one of the four ACOA provinces. One is a New York-based, Nova Scotia-incorporated company that a spokesperson said has two full-time employees in the province, both of whom are executives and work remotely, and also employs contractors. The other is a Nova Scotia-registered company whose 11 team members all appear to be based in Toronto or London, U.K., according to a review of Linkedin profiles. A company director reached by HBB declined to comment.
A spokesperson for the agency said: “ACOA’s purpose is to facilitate the creation of employment opportunities in Atlantic Canadian communities regardless of where a company’s head office is located. It is our goal to see economic growth in Atlantic Canada, which includes increasing employment and retaining existing employment for businesses we work with and have operations in the region.”
-HBB
